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Bucharest Stock Exchange steps up corporate governance in listed companies

By Olga Rosca

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Bucharest Stock Exchange - EBRD

Higher standards of governance and transparency for better-run businesses

The Bucharest Stock Exchange (BVB) has taken an important step towards better corporate governance at Romania’s listed companies by adopting a new corporate governance code developed together with the EBRD.

The new corporate governance framework promotes higher standards of governance and transparency for companies whose shares are admitted to trading on the regulated market and will enter into force on 4 January 2016.

Ludwik Sobolewski, BVB CEO, said: “We are deploying new measures in order to lay down the most solid base for the capital market in Romania. The new code of corporate governance is a modernised set of ‎rules and practices, which will increase the attractiveness and valuation of Romanian companies for the greatest benefit of investors. We are introducing this code, with a new system of compliance and enforcement, because Romania no longer wished to remain as a frontier on the map of European markets.”

Gian Piero Cigna, Senior Counsel at the EBRD, who has helped develop the new code, said: “The new code is much more focused and precise in what is required from listed companies. For instance, it provides a clear list of functions that are expected from the audit committee, therefore complementing the law. I particularly welcome the emphasis on the value of establishing a continuous relationship with investors and the quality of disclosure. The new code is yet another step towards transforming the Romanian capital market into an attractive investment destination.”

As part of the Corporate Governance Advisory Board of BVB the EBRD has also helped develop the corporate governance monitoring manual and rating methodology.

The Bank is a shareholder in the Bucharest Stock Exchange. It acquired a 4.99 per cent stake in the bourse last year, as part of efforts to help develop Romania’s capital markets. As a shareholder, the Bank is working to establish the bourse as the preferred exchange for Romanian issuers and traders, as well as for investors with an appetite for Romanian stocks and other financial instruments.

The EBRD is also advancing reforms at the exchange through its recently elected representative on the board of the Central Depository, an institution which ensures clearance and settlement of the transactions concluded on the Bucharest Stock Exchange and records the registries of issuers.

Previously, the Bank invested in the initial public offerings of the gas and electricity distributors Romgaz and Electrica and participated in all bonds issued by local banks over the last two years under its dedicated €150 million framework. The EBRD is also working with the authorities to provide advice and support for reforms and is encouraging Romanian businesses to tap into local capital markets.

The EBRD is the leading institutional investor in Romania and to date has invested over €7 billion across 374 projects in the country, with almost €600 million of that total invested in 2014 alone.

Developing capital markets and local currency lending in the countries where the EBRD invests is among the priorities of the organisation. As part of its Local Currency and Local Capital Markets Initiative, launched in May 2010, the EBRD works to enhance the macroeconomic, regulatory and market framework to ensure long-term, sustainable and liquid local currency markets.

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